👉Festive season starting .
Keep on Radar Under owned Sugar sector for Quick Gains
Our Top pick
Accumulate- 68 to 73
Cmp – 73.90
Market cap – 1688cr
52 week H/L – 182/ 58.70
1st T – 86
2nd T – 105
3rd T – 115
S/L – 65.20
Upside – 55%
Time frame – 6 to 9 months.
Rationalate: Sugar Sector is highly regarded as Connected to Politics.
UP is one of the largest Producers of sugarcane in India.This also translates to largest Vote Bank of India.
As elections are approaching Central Government is in no mood to disappoint farmers which are potential Vote Banks for Government.
This Can be seen in Central Government Raising Minimum Price of sugar to Rs.29.50 when prices fell below Rs. 25 few days weeks back.
If Prices don’t firm up , Sugar mills would not be in a position to pay dues to farmers and thus directly affecting farmers and their income levels , which can derail Rural consumption economy and Put present government in trouble for 2019 General Elections.
Thailand, Europe,Brazil all had record Production Last year which has resulted in Global Glut and impacting prices.Production of sugarcane increased from 50% to 30 % respectively.
While Situation in Thailand Europe is firm But Brazil has started to weigh.
Brazil is facing with Drought conditions and is predicted that 30 % of supply to be affected.
Another major factor is Brazil which shifting to Sugarcane to Ethanol production because of high realisation which will cut supply of Sugar in global markets.
While there are initial signs from Brazil of low production but India and Thailand won’t stop that easily.
One should Invest in these stocks with the above factors in mind .
Sugar Cycle will revive but it will take time.
Currently it looks like situation will bottom and investors with 2- year horizon can expect 40% gains and in short term 10-15%.
Factors affecting supply In India:
Indian government increasing FRP from Rs.255 to Rs.275 which will further encourage farmers to boost production and create supply Glut.But this may help in Elections.
Disc – All views expressed are for educational and study purpose only.consult your financial advisor before investing.